By Gagandeep Singh, Syncrude
The year 2008 saw one of the most dramatic rise and fall in crude oil prices. The credit crisis, coupled with tumbling financial institutions led to a drastic fall in business activity. High degree of uncertainty on both the supply and demand side of the energy equation led to two very interesting and distinct responses by the energy companies. Trepidation led to shelving of the capital-intensive new projects by most energy companies. Painful lay-offs followed. These companies looked at near term cost reductions and did it successfully. Apparently, this looks like a very logical response till the time we look at the other group of companies.
These were the companies that set aggressive goals making explicit trade-offs between short-term losses and long-term profits. They over invested in workforce and equipment, which form a relatively small part of the overall cost for capital-intensive energy projects, typically less than 3 percent of the overall project cost. This approach helped them greatly to expedite their projects. They could negotiate hard with the suppliers and contractors who were desperate for business and would agree to all the aggressive cost and schedule targets set by the client companies. Employees were given simple goals that clearly aligned with the KPIs. These companies did not shy away from sharing the productivity gains with the workers in form of bonuses and measured their success by average earnings per worker growth.
There is no single measure to define which of the two reactions to a global crisis was a better management practice. However, it is clear that the companies that adopted the second approach have more productive employees and will continue to enjoy the workforce commitment. Attracting and retaining a productive employee often ties in with good management practices in the tougher economic time. Energy companies are facing a tough competition to attract young brains and I would suggest the following 3-Ls to create the “Happiness Trilogy” for efficient workforce management:
1. Leverage Your Brand Image To Attract Talent: Employees are happier to work for an organization that is valued by the outside world. The work force today is more influenced by environmental issues and sustainability than ever. So, the energy companies should invest heavily in creating an environment friendly image.
2. Learn To Empower The Employees: There has been a grossly wrong prevailing view that investing in training of new recruits is a waste of training resources. Rather, investing early in training and developing talent creates a lot of loyalty. New employees feel a part of a nurtured community, which positively influences happiness and connectedness. Energy companies are facing an uphill challenge of filling the gap for talent in the wake of a large number of retiring employees in the next five years and transferring the skills from senior employees to the younger workforce is vital.
3. Link Loyalty To Rewards: The third important piece in this happiness trilogy is making an employee feel that he is a valued member of the organization. The best managers always have a choice in their careers. Retaining these managers is central to all the good organizations. High attrition rate at senior levels can have a significant negative impact on the bottom line of companies. Linking loyalty to rewards can ensure that the creative talent is retained in the organizations.
Gagandeep Singh is an independent consultant with Syncrude Canada Ltd., where he works in project controls for major projects. He earned his MBA from Rotman School of Management, University of Toronto and BS (Chemical Engineering Honors) from Punjab Technical University. His research interest lies in improving productivity and competitiveness of energy companies. He lives in Edmonton with his wife Navina.
Syncrude operates largest oil sands facility in the world. The Syncrude operations are located on the Athabasca Oil Sands Deposit in northeastern Alberta, Canada.